Tender conditions provided different approved modes for furnishing Earnest Money Deposit. Clause relating to out-of-State bidders employed expression “may submit” Demand Draft. Bidder furnished Fixed Deposit Receipt/interest-bearing security in favour of Tendering Authority. High Court treated furnishing of Demand Draft as mandatory and disqualified bidder. Supreme Court held that tender clauses were merely enabling and directory in nature and not mandatory. Fixed Deposit Receipt constituted an approved interest-bearing security within meaning of tender conditions. Court cannot import technical disqualifications not expressly contained in tender document. Disqualification set aside and qualification restored.
(Paras 7 to 10)
FACTS OF THE CASE
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A tender was floated by the Water Resources Department for execution of a construction project of substantial value. The tender process contemplated submission of bids in three envelopes, including technical and financial qualifications.
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Under the tender conditions, Earnest Money Deposit (EMD) was required to be furnished in approved forms specified in Clause 2.13 of the tender document.
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The bidder, being an out-of-State participant, furnished a Fixed Deposit Receipt/interest-bearing security in favour of the Executive Engineer concerned instead of a Demand Draft.
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The Tendering Authority initially found the bidder qualified. However, the High Court subsequently disqualified the bidder holding that out-of-State bidders were mandatorily required to furnish EMD only through Demand Draft.
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Before the Supreme Court, it was contended that the tender conditions used permissive language and recognized alternative approved interest-bearing securities, thereby making submission of Demand Draft optional and not mandatory.
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During pendency of proceedings, a subsequent disqualification relating to another stage of technical scrutiny also arose, though the same was not directly under challenge before the Supreme Court.
ANALYSIS OF FACTS AND LAW
The Supreme Court undertook a textual interpretation of the tender conditions governing submission of Earnest Money Deposit. The Court focused particularly upon Clauses 2.13 and 2.15 of the tender document.
The Court observed that the clause applicable to out-of-State bidders repeatedly employed the expression “may submit” while referring to submission of Demand Draft. The use of permissive language indicated that the provision was enabling and directory rather than compulsory.
The Court further noticed that the tender conditions themselves recognized “Approved Interest Bearing Security” as one of the valid forms of EMD. A Fixed Deposit Receipt clearly possessed the character of an interest-bearing security and therefore substantially satisfied the tender requirement.
The judgment emphasizes that in tender jurisprudence, Courts cannot create additional disqualifications by interpretative expansion when the tender document itself does not prescribe such mandatory exclusion. Judicial review must remain confined to the actual stipulations contained in the contract.
The Supreme Court therefore held that the High Court erred in converting an optional mode of payment into a compulsory condition and thereby illegally excluding the bidder from consideration.
The Court also adopted an equitable approach regarding the subsequent disqualification arising at Envelope-B stage by permitting the bidder to approach the authorities afresh after restoration of qualification under Envelope-A.
RATIO DECIDENDI
Where tender conditions governing Earnest Money Deposit employ permissive language such as “may submit” and simultaneously recognize multiple approved forms of security, furnishing of Fixed Deposit Receipt/interest-bearing security by an out-of-State bidder constitutes substantial compliance with the tender conditions, and Courts cannot treat submission of Demand Draft as a mandatory requirement by importing a disqualification not expressly contained in the tender document.
(Paras 7 to 10)
HELD
- Judgment of the High Court set aside.
- Bidder’s qualification with respect to Envelope-A restored.
- Liberty granted to approach Tendering Authority regarding subsequent Envelope-B disqualification.
- Supreme Court refrained from adjudicating merits of Envelope-B disqualification.
